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A Shredded Safety Net

“I’m not concerned about the very poor. We have a safety net there.” —Mitt Romney,February 1, 2012

In 1996, the year that Congress passed and Bill Clinton signed welfare reform, fulfilling his campaign pledge to “end welfare as we know it,” there were 14.5 million poor children in the United States; 8.5 million children were in families that received cash assistance from Aid to Families with Dependent Children (AFDC), or welfare. Even then, nearly half of poor children were not in families that received welfare.

Following welfare reform, the number of families receiving assistance declined dramatically. Buoyed by the strong economy and the expansion of other key work supports, including child-care subsidies, public health insurance under Medicaid and the Children’s Health Insurance Program, and the Earned Income Tax Credit, the number of single mothers in the workforce increased and child poverty declined. However, starting in the early 2000s, progress stalled and poverty rates began to climb again.

Ten years after welfare reform, in 2006, just before the recession, there were still 12.8 million poor children in the U.S., and just 3.4 million children were in families that received cash assistance in an average month from Temporary Assistance for Needy Families (TANF), the program that replaced AFDC. Stringent income limits continued to disqualify many families, but millions more, with incomes low enough to qualify, did not receive cash assistance. The Government Accountability Office estimates that 87 percent of the decline in caseloads from 1995 to 2005 was caused by eligible families failing to receive help, not by decreased need.

Five years later, in 2011, as a result of the worst recession in generations, the number of poor children in the U.S. had climbed to 16.1 million, but still just 3.4 million children were in families receiving cash assistance under TANF. The number of families receiving help grew in some states, but never as much as need rose. Other states shortened time limits on benefit receipt despite continued high unemployment and need. If caseloads were low because families had no need for help, we would have reason to celebrate. But this is not the case. In too many states, TANF is simply failing in its mission of protecting children from hardships caused by deep poverty.

Fortunately, poor families were not left completely without support. Many continue to receive food stamps, now known as the Supplemental Nutrition Assistance Program (SNAP). In fact, in 2011, 1.2 million households with children that received SNAP reported having no income at all. However, SNAP was never designed to be a family’s only source of income, and SNAP benefits cannot be used to pay rent or buy such necessities as toothpaste, diapers, clothing, or gas.

One of the key reasons TANF was not a more robust safety net during the recession is its fiscal structure. States receive a fixed amount of funding—in the form of a block grant—that does not increase when times are tough, and the value of those funds has decreased over time due to Congress’s failure to adjust it for inflation. Moreover, states have the flexibility to use these funds for a wide range of programs and services. Given the dependence of state revenues on the economic cycle, and their obligation to achieve a balanced budget each year, states have strong incentives not to serve additional families, regardless of the need. This provides a cautionary reason to oppose block granting other programs, such as SNAP and Medicaid, as proposed by Representative Paul Ryan.

While Mitt Romney’s opinions are not as important as they would have been if things had gone differently in November, Ryan still has significant influence as chair of the House Budget Committee. Congress should find ways to strengthen the tattered safety net so it can catch those children and families who need it—not shrink the net while claiming to be helping.